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Whitbread investor pushes to break up FTSE 100 leisure giant

An activist hedge fund is pushing for an aggressive break-up of Whitbread, which would leave the company loaded with debt, with scores of its properties sold off and the proceeds returned to shareholders in a move reminiscent of the private equity deal boom that preceded the financial crisis.
It is understood Sachem Head wants to see the leisure giant raise billions of pounds through a sale of its Costa Coffee chain, a sale and leaseback of its Premier Inn hotel estate, and a ratcheting up of debt levels. Much of the money raised would be handed back to investors ­under the fund’s radical plan.
Whitbread investor pushes to break up FTSE 100 leisure giant

Whitbread's chief executive Alison Brittain says the company is making good progress with its Costa brand, and its expansion plans are not over yet

Credit:
Nick Ansell/PA
However, Whitbread is expected to reject the proposal. Although boss Alison Brittain said the company wasn’t against a split, she defended efforts to reignite growth at Costa by expanding rapidly in China, saying it had made “good progress”, but was not complete.
Shares in Whitbread have remained virtually flat over the past 12 months, amid concern that it could suffer further from the high street slowdown. The American hedge fund disclosed a 3.4pc stake in Whitbread last month, sending its shares up more than 7pc.
Sachem Head has around $4bn (?2.8bn) of ­assets under management. It was set up in 2013 by Scott Ferguson, a protege of billionaire activist Bill Ackman, whose activist fund Pershing Square Capital Management is one of the largest in the world.
Whitbread investors are likely to have concerns about a plan that puts the company under financial strain.
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